Asia light ends - key market indicators this week

Singapore — The Asian light ends market rose Monday, buoyed by stronger crude futures and RBOB/Brent cracks due to US refinery run cuts, which lifted Asian gasoline, while Asian naphtha sees renewed demand from end-user bargain hunting. Asian LPG rose in anticipation of some May cargo cancellations from Saudi Aramco.

June ICE Brent crude futures edged up 15 cents/b from 0830 GMT Friday to stand at $27.92/b at 0300 GMT Monday.

GASOLINE

** May FOB Singapore 92 RON gasoline climbed to around $25.30/b Monday morning, buoyed by a sharp rise in US RBOB/Brent crack and a stable crude complex.

** The US RBOB/Brent crack rallied to $2.52/b at 0230GMT Monday, more than double the $1.25/b seen at the Asian close on Friday, led by news of more refinery run cuts in the US, sources said.

** US RBOB/Brent crack will buoy the Asian gasoline complex this week, as the former recovers on expectations of increased gasoline demand in May following US President Donald Trump's announcement last week on the progressive reopening of US states.

** Participants are keeping an eye on new policies by regional governments to stop the spread of the coronavirus as the Muslim fasting month of Ramadan starts on Thursday. The seasonal peak in land transport use is expected to buckle with Malaysia and Indonesia having tightened travel restrictions.

LPG

** Propane May CP swap notionally indicated at $344/mt Monday, up $8/mt from Friday's close, in anticipation that Saudi Aramco may cancel some cargoes in its acceptances of May term nominations. So far traders on Monday said no announcement was seen.

** Any shortfalls are likely to tighten the prompt market amid firm demand. This notionally widened the May/June propane CP swap backwardation early Monday to $43/mt versus $30.50/mt at Friday's close. This is the widest prompt month backwardation since February 18, when the March/April structure stood at $48/mt.

** Traders were mixed whether India will continue to import after securing around half a million mt for April-June. Some said they might have overbought, while others said they might need more.

** Concerns over further Indian demand for evenly split cargoes could prompt Indonesia to eye further buying opportunities at a time of relatively low prices despite the recent recovery to two-month highs.

** With ample arrivals of US LPG to Asia in May, half of which are China-bound, and lower Middle East volumes, the spread of March FEI propane to CP swaps notionally flipped to minus $7/mt Monday from plus $1/mt last Friday.

NAPHTHA

** The CFR Japan naphtha benchmark opened Monday at $211.75/mt, up $12.50/mt from Friday's Asian close, on higher crude futures and strong demand from steam cracker operators keen to bargain hunt with naphtha below $200/mt.

** The contango on May/Jun MOPJ naphtha swap spread narrowed, rising $1.50/mt from Friday's Asian close to minus $10.50/mt Monday morning.

** Asia is slated to receive high flows of Western arbitrage cargoes, with shipping fixture showing a total of at least 2.086 million mt for April loading amid a wide east/west spread. Traders said the total could amount to up to 2.7 million mt for May arrivals in North Asia. Shipping delays had affected at least 391,000 mt of Europe-origin arbitrage naphtha shipments, which would delay its arrival in Asia to H1 June, from H2 May, cFlow, Platts trade-flow software showed.

** The east/west spread between the April CFR Japan naphtha and CIF NWE naphtha firmed Monday morning to $41.75/mt, up $7.50/mt from Friday's Asian close as Europe continued to lag Asia.